Kodak (EK) Takes Steps to Strengthen Financial Position: to Sell Up To $400M in Notes to KKR

September 16, 2009 4:18 PM EDT

Eastman Kodak Company (NYSE: EK) announced today that it expects to raise up to $700 million through a series of financing transactions, including a commitment from Kohlberg Kravis Roberts & Co. L.P. (KKR) managed investment vehicles to purchase up to $400 million in Senior Secured Notes due 2017, that reinforces the company's strategic direction and strengthens its financial position.

In addition, Kodak agreed to issue to KKR warrants to purchase up to 53 million shares of Kodak common stock. Kodak, at its discretion, may issue to KKR as few as $300 million of the Senior Secured Notes, in which case the number of shares underlying the warrants will be adjusted to as few as 40 million, with the actual number of warrants pro-rated depending on the final amount of notes purchased. Under the terms of the agreement, KKR is required to hold the warrants and shares issuable upon exercise of the warrants for a minimum of two years.

The net proceeds of this transaction, along with the net proceeds of a separate private placement transaction of convertible senior notes announced today, will be used to repurchase the company's existing 3.375% Convertible Senior Notes due 2033, a move that will bolster the company's balance sheet and free up capital for core investments. Any excess proceeds will be used for general corporate purposes.

Sees Q2 sales down 4-6% and FY09 sales down 12-18%.

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